GameStop says its used games business generates $1.8 billion for developers, publishers

GameStop president Paul Raines told Gamasutra in a Monday interview that the sale of used games generates $1.8 billion for the video game industry. How? Because 70 percent of used game trade-ins, according to Raines, are used to purchase brand new games at the companies stores.

These numbers don’t illustrate GameStop’s positive influence on the gaming industry. They demonstrate how the company’s future is going to be cut short and soon.

Some facts about the video game industry from the ESA: People spent $24.75 billion on games, accessories, and the devices on which to use both in 2011. Digitally distributed content generated more than $7 billion of that total across the year, 31 percent of the total take. That number is already growing this year. According to the NPD video game sales tracking firm, digital sales are up 11% halfway through 2012, totaling $1.38 billion so far.

These numbers illustrate a point: GameStop, the premiere video game retailer in the US, is in trouble. The company relies on the sale of used goods, physical copies of video games and consoles, for the vast majority of its profits. With the shift to digital distributed content, GameStop is scrambling to change its identity. Its executives claim that the sale of consoles and the need for credit card alternatives like gift cards and download vouchers for services like iTunes, Steam, Xbox Live, and the PlayStation Network will keep it solvent. It’s also starting to explore ways to somehow allow the resale of used digital downloads. Tired of that downloaded copy of Plants vs. Zombies? Trade in the license to GameStop for store credit just like you always have.

Those strategies may not be enough to save a company who’s watched its revenue crumble as people spend less and less on physical games and goods. That’s why Raines and his company are looking to appeal to developers, claiming that game makers need to rally around GameStop because of how integral to the business its pre-owned games business is.

“The knowledge of how [the used games sales] model helps drive sales really resides at the publisher level,” said Raines, “We have not been successful in communicating to developers how this business really helps. Now, if I’m a developer, I know that [used games] give me heartburn… We’re really not cannibalizing new game sales. That’s a common misconception. So my answer to developers is that we are driving growth in a category that needs to grow.”

Indeed, GameStop. But developers are finding that they can sell their goods directly to the consumer through digital services. So… Why do they need you at all?